CRE Dealmakers: Sansone Group's Kornfeld eyes e-commerce-proof retail

Posted on March 15, 2018

From the St. Louis Business Journal

With 14 years of retail real estate experience, Mark Kornfeld is managing director of retail services for Sansone Group, which had a 2017 transaction volume of $203 million. He said e-commerce continues to impact the local retail environment as shops struggle to adjust their models.

We asked him about retail tenants are seeing in the current market.

What’s the state of retail real estate in St. Louis? All growth and development is currently focused around uses that are e-commerce proof. For instance, my partner Grant Mechlin and I represented Lifetime Fitness to acquire a portion of DESCO Group’s redevelopment of the former Shriners Hospital for a nine-acre development that will include an 85,000-square-foot fitness center as part of a three-story, mixed-use facility facing Lindberg adjacent Plaza Frontenac. The facility will include workout space, an indoor pool, outdoor pool, restaurants and a spa. This couldn’t have happened without the cooperation of General Growth Properties, which owns Plaza Frontenac. General Growth worked with DESCO and Lifetime to grant all the cross access and approvals needed. General Growth desperately wanted the foot traffic Lifetime brings.

What segments are riding high? In retail, it’s entertainment, restaurants and fitness, anything that is e-commerce proof. We are seeing many children’s entertainment concepts, such as trampoline parks, gobbling up vacant big box space. Entertainment concepts, such as Punch Bowl Social and Westport Social, are now the uses that anchor new developments in our area. Punch Bowl Social will be an anchor tenant for City Foundry Development in Midtown.

Will that continue in 2018 and beyond? We will see more entertainment popping up — other retail will follow. Multifamily, mixed-use properties are exploding in our market. Retailers are flocking to multifamily buildings with built-in foot traffic from 225 customers living right on top of them. The Shake Shack in the Central West End is a good example of that.

Is new retail construction on the way? City Foundry will open in 2019 and Ballpark Village Phase 2 is in progress. The most recent announcement has been the DESCO Lifetime Fitness project in Frontenac.

Where in the region are you seeing the most growth? Midtown with City Foundry. Midas Hospitality is planning an Element Hotel by Weston and a 129-unit Aloft Hotel in Cortex. Sansone is partnering with Draper and Kramer on a development starting with 225 apartments across from Rigazzi’s on The Hill. With the exception of Ballpark Village, Midtown is where most development is happening.

What's driving growth in St. Louis? Finding an e-commerce-proof anchor and building around it. If you see new construction, there’s a 98 percent chance that the anchor is grocery, fitness, restaurants, entertainment or residential.

What trends are retail tenants noticing? Retailers are doing everything they can to keep a mix between their e-commerce sales and the brick and mortar sales. Retailers are exploring stores with no checkout lines, allowing e-commerce customers to have orders fulfilled and ready for pick up at the brick and mortar locations, and anything possible to make brick and mortar sales easier or more enjoyable for the customer.